By Ken Ryan
Flooring retailers praised Shaw Industries for its acquisition of WPC pioneer USFloors, a move that expands and bolsters Shaw’s reach into the luxury vinyl tile (LVT) and hard surface markets.
USFloors is regarded as the leading innovator of wood plastic composite (WPC) flooring, featuring its patented COREtec, as well as cork, bamboo and hardwood products. Shaw already has a strong position in WPC with its Floorte line, and is a leader in hardwood flooring with its Epic and Anderson brands.
Vance Bell, chairman and CEO, Shaw Industries, said the two companies share similar values and focus on innovation, style and design, and sustainability leadership. “Combining USFloors—the fastest growing company in the fastest growing segment of the flooring business—with Shaw’s LVT position creates a significant opportunity for the combined companies.”
Piet Dossche, CEO of USFloors, told FCNews, “The good thing here is the innovation and the branding will be supported by the incredible logistics and distribution freight system that Shaw has available. We’re combining their operational excellence with the creativity and innovation that USFloors brings to market. It’s a whole new chapter for USFloors.”
Dossche said the transaction was consummated within three months. The deal, terms of which were not released, should be finalized in the fourth quarter pending customary closing conditions and regulatory approvals.
In the interim, retailers are applauding the deal. Sam Roberts, owner of Roberts Carpet and Fine Floors, with multiple locations in the Houston market, called it an “excellent” acquisition for Shaw. “COREtec is the gem in the deal. Their visuals and patents—combined with their brand new manufacturing facility that is just now coming on line—make them extremely attractive. The impact on all of us will largely be dependent on how Shaw chooses to treat the acquisition. If Shaw keeps the current USFloors sales force and chooses not to significantly augment them with additional salespeople and management—which always equals even more dealers and the resultant smaller margins—then the impact on the retail community might be relatively small. Shaw’s a great company and can be an excellent partner. For retailers, as always, it’s largely about achieving and maintaining a competitive position.”
Steve Weisberg, owner of Crest Flooring in Allentown, Pa., compared the Shaw-USFloors deal to the time when Mannington acquired Amtico, which bolstered Mannington’s LVT business and expanded its global reach. “This category is so important and therefore it was a wise move for the future. Shaw certainly knows what they’re doing.”
Jason McSwain, president of Cincinnati-based McSwain Carpets & Floors, a strategic USFloors partner for 12 years, said the deal has a “high positive impact” for his business. “Nine years ago USFloors became a specialty vendor partner with the NFA (National Floorcovering Alliance) and a core vendor in 2009. It is my belief the NFA has a strong competitive advantage with USFloors, and the executive team at Shaw will support this competitive position with enhancements that Shaw does so well—freight enhancements, marketing support, program execution…all will be strengthened through the combined companies.”
Dossche said that while USFloors is growing fast, at some point it would have to build out that infrastructure. “By joining Shaw all that support and logistics and back office operations is already there, so we can concentrate on product innovation and expanding the customer base. Shaw has a very strong, first-class hard surface sales force. We are going to the market from two different angles to grow our footprint at the retail level. We will continue to brand separately and continue to advertise. We have to differentiate the brands rather than being in one melting pot.”
USFloors is in the process of building a domestic manufacturing facility in Dalton, with an expected opening in spring 2017. The plant was built to produce its WPC core. With Shaw’s LVT plant in Ringgold, Ga., already operational, the companies will be able to work collaboratively. “Overnight we will become vertically integrated,” Dossche explained. “We will together be making a fully integrated process. The opportunities going forward are enormous. We are putting strength with strength and our speed to market will accelerate. We will be a formidable player in the LVT/WPC category.”
The Shaw/USFloors combination comes at a time of exploding growth for the WPC category, which Dossche believes has the potential to be a $1 billon market in a few years.
USFloors, which markets its products under the COREtec, Natural Cork, Natural Bamboo, Navarre and Castle Combe Floor and Wall brands, has distribution centers in Dalton; Augusta, Ga., and Anaheim, Calif. In addition, USFloors has an extensive quality control and logistics presence in Shanghai and an international sales and marketing office in Belgium.